North America
Third quarter front month prices of Diesel in North America have been lower than the previous month’s trading prices. US diesel demand has fallen despite economic growth, according to an EIA report. Consumption in the trucking, freight, and construction industries was reported as moderate at the start of this quarter. Diesel prices began climbing upwards from August amid tighter-than-expected crude oil supplies. The number of US oil rigs dropped, and a fire at a Louisiana refinery created some ambiguity in the Diesel market. Moreover, during August, North America battled with inflation. After a statement on the possibility of further rate hikes by US Federal Reserve Chairman Jerome Powell, the dollar rose to a 3-month high on Friday. Higher interest rates can result in a sluggish economy. A decrease in domestic crude oil inventory this month supported the price rise further in September. According to EIA’s recently released petroleum status report on Sept. 27, U.S. crude oil inventories decreased by 2.2 million from the week ending Sept. 15 to the week ending Sept.22. The Baker Hughes count dropped by 11, standing at 149. Moreover, according to traders, oil refineries cut down the number of maintenance schedules in the Diesel unit since they wanted to earn more margins amid high Diesel and Gasoline demand and less inventory. Thus, as of September, Diesel prices in North America closed at USD 4.52 per gallon, DEL-Washington.
APAC
Front month Diesel prices in Q3 showed a significant uptick backed by oil production cuts by OPEC+ countries. China’s diesel exports were weak throughout July. Chinese players diverged towards feeding petrochemical plants, rather than to feed oil refining plants to produce transport fuel such as Diesel, Gasoline, and Jet fuels, to cater to domestic petrochemical demand. Thus, the prices as of 31st July closed at USD 1090 per MT, Ex-Beijing, with an incline of 14.3% compared to the previous month’s Diesel prices. Supply cuts by major oil-players and anxiety about a global economic downturn led to a Diesel price increase in emerging economies like India. Moreover, the AAP government increased retail prices of diesel by 88 paise with added tax. Demand in the power sector was high due to eccentric weather and higher-than-normal temperature driven by El Nino. Prices gained stability in August. Factors such as an increase in shipments of Iranian crude oil to Asia, China’s skeptical economic growth, increased operations in domestic refineries, a hotter summer, India’s increasing crude oil consumption all balanced the Supply-demand curve. In September, the announcement of Saudi Arabia and Russia’s voluntary production cut till the end of this year supported the price hike in China. However, India’s Diesel prices witnessed a significant drop of 12.6 percent since the Indian Government reduced duties on Diesel. High Diesel export volume to Europe and low freight rates in the Asia-Europe lane supported India’s trade deficit balance amid lower domestic fuel prices. Thus, as of September 29, Diesel prices in India closed at USD 1.17 per litre, Ex-Delhi.
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South America
At the start of the second quarter this year, Diesel prices in Brazil registered a decline of 2.57% from the previous month. The major reason behind this decline was an overflow of discounted Russian crude oil. Diesel prices in Brazil bounced back with a slight hike after Petrobras, a Brazilian state-run oil company, raised its Gasoline and Diesel prices in the second week of August amid a global oil price hike. A tight market amid global demand was reported in August. According to the emerging market league table, Brazil maintained its second rank with the highest import cover and top stock market performance. However, the Brazilian IPCA, the benchmark inflation index observed by the Central bank of India, jumped to a higher-than-expected forecast of 4.2% y-o-y in August, exacerbating the pace of rate hikes by the Central government. Diesel prices in South America’s largest economy witnessed a significant hike since the price hike announcement both by domestic players Petrobras and internationally by OPEC countries. According to EIA’s recently released report, the oil rig count in the west American region decreased. On the international front, Crude oil prices could further surge because of a recent attack by Hamas on Israel. Thus, Diesel prices in Brazil as of Sept. 29 hovered around USD 5.8 per gallon, Ex-Rio de Janeiro.
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